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Credit Agricole First-Quarter Net Rises 51% After Greek Exit (1)

May 07, 2013

Credit Agricole First-Quarter Profit Rises 51% After Greek Exit

The Credit Agricole SA company logo is seen outside a branch in Paris. Credit Agricole has gained 18 percent in Paris trading this year, giving the bank a market value of about 18 billion euros. Photographer: Fabrice Dimier/Bloomberg

Credit Agricole SA (ACA:US), France’s third- largest bank, said first-quarter profit climbed 51 percent, helped by the disposal of its unprofitable Greek division.

Net income rose to 469 million euros ($613 million) from 311 million euros a year earlier, the bank, based in Montrouge near Paris, said in an e-mailed statement today. That topped the 374.4 million-euro average estimate of eight analysts surveyed by Bloomberg.

Credit Agricole, led by Chief Executive Officer Jean-Paul Chifflet, completed the sale of its Greek consumer-banking unit Emporiki in February and shut its riskiest investment-banking businesses. The company now is struggling to contain rising bad- loan provisions at its unit in Italy, the lender’s biggest market outside of France.

The first-quarter results showed the “stability” of the bank’s key businesses following the Emporiki sale, Chifflet, 63, said on a call with journalists. The CEO reiterated the firm aims for “significantly positive” net income in 2013 following two consecutive years of annual deficits.

Credit Agricole rose 1.1 percent to 7.28 euros by 9:01 a.m. in Paris trading. The shares have gained 19 percent this year, giving the bank a market value of about 18.1 billion euros. That compares with a 7.3 percent increase in the 40-member Bloomberg Europe Banks and Financial Services Index.

Cost Cuts

Credit Agricole, like larger French rivals BNP Paribas SA (BNP) and Societe Generale SA, is pushing through cost cuts as Europe’s economic crisis threatens to bite into profit. The lender said in February that it expects to reduce expenses by 650 million euros by 2016 via changes to information-technology resources, real estate and procurement.

Net income at the corporate and investment bank fell 50 percent to 238 million euros in the quarter, beating analysts estimates of 193 million euros. Revenue from capital markets fell 31 percent, while corporate-lending sales dropped 14 percent, it said.

Credit Agricole aims to reach a 12 percent return on equity, a profitability measure, at the corporate and investment bank over the “medium term” by cutting fixed costs by about 15 percent compared with 2011, the firm said in March.

Credit Agricole Group, the entity regulators look at to gauge capital and liquidity, had a Basel III core Tier 1 ratio of 9.6 percent as of March 31. The bank maintained its year-end goal of a 10 percent ratio.

Economic Slump

The company, like BNP Paribas and Societe Generale, started trimming its balance sheet in 2011 after French lenders had access to U.S. dollar funding and European debt markets blocked. Last year, France’s three largest banks shrank risk-weighted assets by a combined 128 billion euros and cut thousands of investment-banking jobs.

Now French banks are counting the cost of the economic slump at home. The economy has barely grown over the past two years and joblessness is at a record high. The total retail- banking revenue of the country’s five largest lenders -- including Groupe BPCE and Credit Mutuel-CIC -- last year declined for the first time in two decades and it will probably keep falling 1.2 percent annually through 2015, according to Munich-based Roland Berger Strategy Consultants.

Profit from Credit Agricole’s French regional banks networks fell 7.7 percent to 343 million euros in the quarter, while profit at the LCL French consumer-banking division dropped 15 percent, the lender said. Bad-loan provisions from the regional banks was 404 million euros, up 21 percent compared with a year earlier, LCL’s provisions rose 14 percent in the first quarter from a year earlier, the company said.

In Italy, Credit Agricole’s largest market outside of France, the Cariparma consumer-banking unit had a 28 million- euro profit, down 9.8 percent from a year earlier. The French lender also booked 232 million euros in first-quarter bad-loan provisions at its Italian personal-finance unit Agos Ducato, it said.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net


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